America the charitable: a few surprises

Everybody knows Americans are big givers. But their charitable impulses keep generating surprises.

Consider just a few conclusions from recent research:

•Charitable giving plays an even larger role in the economy than is suggested by some $260 billion in annual contributions. Each dollar of giving appears to create $19 of extra national income, according to a book released this past weekend.

•Demand for nonprofit services gets proportionately bigger, not smaller, as a locality's income rises, a Federal Reserve economist finds.

•The philanthropy of the wealthy may not hinge on tax incentives to the degree many believe. In one new survey, a majority of wealthy givers say they would contribute the same amount if the estate tax were abolished. Ditto, they said, if they could no longer deduct the value of gifts from their taxable income.

These disparate studies are shedding light not just on who gives but also on why they give and what their actions mean to society. Often, the conclusions run counter to expectations.

"This is supposed to be the start of a conversation. It's the first word, not the last word," says Arthur Brooks, referring to his new book on charity, called "Who Really Cares." "We need more people thinking about [the study of charitable giving] in a serious way."

He and other experts say that by understanding charity better, Americans can learn how to encourage more giving. The result would probably be a healthier and wealthier society.

Of course, it's not as if American philanthropy has never been studied before. A number of institutions track the nonprofit sector full-time in one way or another. But the data on charity-linked activities are far less complete – and less systematically analyzed – than for areas such as government and private industry.

One thing that's long been known: The US leads the world in levels of charitable activity. The pattern runs from the rich, steeped in long tradition of philanthropy, to the poor. Those making $20,000 or less a year give away more, as a share of their income, than do higher income groups.

Americans donate their time as well as money – some $150 billion worth annually (measured by using an estimated average value of $18.04 per hour).

"I see a great commitment," says Karen Rivers, who recruits helpers for the Colorado branch of Volunteers of America in Denver. "We just were inundated with people who wanted to volunteer for Thanksgiving Day."

She had to turn volunteers away as the group served holiday meals to about 3,000 homeless and others in need.

Some experts see charity as a defining trait of the US, more than consumerism or business. But those forces may be intertwined.

For one thing, many nonprofits are selling services – from healthcare to classical music – in a marketplace alongside for-profit rivals. By many measures, they are successful.

For example: As personal incomes rise in a given county, the income of nonprofits seems to rise even faster, says Rob Grunewald, an associate economist at the Federal Reserve Bank of Minneapolis, who has analyzed counties in 47 states. This suggests that not-for-profit activities are what economists call a "superior good," something people want to buy more of (or donate more to) as their incomes rise.

But ties between charitable ventures and the economy hardly end there.

In his new book, Dr. Brooks points to evidence that charity is no mere peripheral activity. It pays off for society in ways that may transcend the rates of return on many traditional investments. Why?

It's not just that charity helps those on the receiving end, says Brooks, an economist at Syracuse University in New York. It also strengthens the cohesion of society at large. Moreover, it appears to make the givers themselves more successful, possibly because the activity transforms them somewhat into better or happier people. Whatever the reasons, he finds that higher income tends to push up charity – and that greater charity tends to push up income.

Another provocative conclusion is that conservatives are better givers than liberals – a theme that is likely to draw close scrutiny. This pattern is less about politics, he says, than about charity-linked lifestyles that are most common to people who call themselves conservatives: religious commitment, marriage and children, and entrepreneurship.

Still, Brooks's main point is that more Americans, regardless of ideology, should embrace giving as a tool for progress. He quotes Proverbs: "One man gives freely, yet gains even more; another withholds unduly, but comes to poverty."

Many who do charitable work can relate to that. Pier Penic works in public relations, but her passion is what she does for free as the founder of Culture at Home, a support group near Washington, D.C., for mothers who are home-schooling their kids. "I'm doing more here than I would at a corporate job," she says. "I love to see results."

Her story echoes some of the common forces that motivate people to give time or money to charity: First, she identifies with challenges facing home-school moms. In her case, the feeling is amplified because she herself is one of those moms. Second, she wants to make a difference. Third, she draws satisfaction from the effort to help.

These forces are among the core motivations that foster actions of generosity beyond the sphere of one's family circle, says Paul Schervish, who heads the Boston College Center on Wealth and Philanthropy. "There would still be a need for philanthropy, even if our economic needs were all taken care of."

The urge to make a difference, and to take satisfaction in it, outweighs monetary considerations. For example, a survey of 945 ultrarich individuals released last month by Bank of America and the Center on Philanthropy at Indiana University found that slightly more than half would give the same amount regardless of whether the estate tax or deductions for charitable giving were repealed.

None of this means that tax policy is trivial for charitable giving. But the survey suggests that Americans' penchant for giving isn't driven primarily by tax breaks.

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